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Is this the year of the great low-cost carrier shakeout?
Tiger Airways Holdings Ltd., the unprofitable low-fare carrier part-owned by Singapore Airlines Ltd., said its Indonesian venture will stop flying, as the budget airline tries to restructure operations.
Mandala will cease operations from July 1, Tiger Air said in a statement to the Singapore stock exchange today. Mandala wouldn’t be able to sustain its operations and the airline’s key shareholders decided to cease funding the carrier, Tiger said in the statement. The Singapore-based budget carrier had last year increased its stake in the venture to 35.8 percent.
“Mandala’s financial results reflect the challenges that it is facing in the difficult operating environment,” Tiger Air Chief Executive Officer Lee Lik Hsin said in the statement. “The partners in Mandala have jointly come to the conclusion to cease funding the airline’s operations.”
Tiger Air is grounding planes and canceling aircraft orders as part of a restructuring after mounting losses led largest shareholder Singapore Air to name a new CEO for the low-fare airline. The restructuring efforts are symptomatic of the challenges budget airlines face in Southeast Asia, where competition among half a dozen carriers has pushed fares down.
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